Chapter 4. The Shape of the Eco-Economy: Ecology Over Economics

Ecologists understand the ecological processes that support life on earth. They understand the fundamental role of photosynthesis, the concept of sustainable yield, the role of nutrient cycles, the hydrological cycle, the sensitive role of climate, and the intricate relationship between the plant and animal kingdom. They know that the earth's ecosystems supply services as well as goods and that the former are often more valuable than the latter.

A sustainable economy respects the sustainable yield of the ecosystems on which it depends: fisheries, forests, rangelands, and croplands. A particular fishery can sustain a catch of a certain size, but if the demands on the fishery exceed the sustainable yield by even the smallest amount—say, 2 percent a year—the fish stocks will begin to shrink and will eventually disappear. As long as the harvest does not exceed the sustainable yield, it can be sustained in perpetuity. The same is true for forests and rangelands.

Nature also relies on balances. These include balances between soil erosion and new soil formation, between carbon emissions and carbon fixation, and between trees dying and trees regenerating.

Nature depends on cycles to maintain life. In nature, there are no linear flow-throughs, no situations where raw materials go in one end and garbage comes out the other. In nature, one organism's waste is another's sustenance. Nutrients are continuously cycled. This system works. Our challenge is to emulate it in the design of the economy.

Ecologists appreciate the role of photosynthesis, the process by which plants convert solar energy into the biochemical energy that supports life on the earth. Anything that reduces the photosynthetic product, such as desertification, the paving of productive land, or the acidification of lakes by acid rain, reduces the productivity of the earth in the most fundamental sense.

Despite this long-standing body of ecological knowledge, national governments have expanded economic activity with little regard for sustainable yields or the fragile balances in nature. Over the last half-century, the sevenfold expansion of the global economy has pushed the demand on local ecosystems beyond the sustainable yield in country after country. The fivefold growth in the world fish catch since 1950 has pushed the demand of most oceanic fisheries past their ability to produce fish sustainably. The sixfold growth in the worldwide demand for paper is shrinking the world's forests. The doubling of the world's herds of cattle and flocks of sheep and goats since 1950 is damaging rangelands, converting them to desert.2

An ecologist not only recognizes that the services provided by ecosystems may sometimes be worth more than the goods, but that the value of services needs to be calculated and incorporated into market signals if they are to be protected. Although calculating services is not a simple matter, any reasonable estimate is far better than assuming that the costs are zero, as is now the case. For example, a forest in the upper reaches of a watershed may provide services such as flood control and the recycling of rainfall inland that are several times more valuable than its timber yield. Unfortunately, market signals do not reflect this, because the loggers who are cutting the trees do not bear the costs of the reduction in services. National economic policies and corporate strategies are based largely on market signals. The clearcutting of a forest may be profitable for a logging firm, but it is economically costly to society.

Another major failure of the market to provide reliable information comes when governments subsidize the depletion of resources or environmentally destructive activities. (See also Chapter 11.) For example, over several decades the U.S. Forest Service used taxpayer money to build roads into national forests so that logging companies could clearcut forests. This not only artificially lowered the costs of lumber and paper, it led to flooding, soil erosion, and the silting of streams and rivers. In the Pacific Northwest, it destroyed highly productive salmon fisheries. And all this destruction was underwritten by taxpayers.3

In a world where the demands of the economy are pressing against the limits of natural systems, relying on distorted market signals to guide investment decisions is a recipe for disaster. Historically, for example, when the supply of fish was inadequate, the price would rise, encouraging investment in additional fishing trawlers. When there were more fish in the sea than we could ever hope to catch, the market worked well. Today, with the fish catch often exceeding the sustainable yield, investing in more trawlers in response to higher prices will simply accelerate the collapse of these fisheries.

A similar situation exists with other natural systems, such as aquifers, forests, and rangelands. Once the climbing demand for water surpasses the sustainable yield of aquifers, the water tables begin to fall and wells go dry. The market says drill deeper wells. Farmers engage in a competitive orgy of well drilling, chasing the water table downward. On the North China Plain, where 25 percent of the country's grain is produced, this process is under way. In Hebei Province, data for 1999 show 36,000 wells, mostly shallower ones, being abandoned during the year as 55,000 new, much deeper wells were drilled. In Shandong Province, 31,000 were abandoned and 68,000 new wells were drilled.4

In an eco-economy, by definition one that respects the principles of ecology, drilling additional wells would be banned once a water table showed signs of falling. Instead of spending money to dig deeper wells, investments would be channeled into measures to boost water efficiency and to stabilize population in order to bring water use into balance with the sustainable supply.

Evidence is accumulating that our global economy is slowly undermining itself on several fronts. If we want economic progress to continue, we have little choice but to systematically restructure the global economy in order to make it environmentally sustainable.